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Lawmakers rally to save Washington, D.C.’s tip credit

Brandon Mowinkel, Unsplash

Restaurants in Washington, D.C., could continue to treat servers’ tips as part of their wages under a bill jointly introduced July 10 by seven of the district’s 13-member lawmaking council.

The measure would overturn the results of a June 19 ballot initiative that disallowed the tip credit. District residents voted 55-45 to kill the practice, which allows employers to count gratuities when computing the wages due tipped staffers. The ballot initiative requires restaurants to raise what they directly pay waiters, waitresses and bartenders to $15 an hour by 2026, from the current level of $3.33.

Restaurants complain that they can’t afford the spike in labor costs, which are already soaring because of a limited labor supply and steadily rising demand. They also note that disallowing the tip credit would widen the pay gap between front-of-house and back-of-house employees. Servers’ compensation would consist of $15 an hour plus all the tips they collect, compared with the $15 an hour that other employees are paid. Even with the tip credit, servers typically make dramatically more than kitchen workers, a situation that makes back-of-house positions extremely difficult to fill.

The bill introduced today would repeal the ballot initiative, a rare occurrence. A referendum vote is regarded as a pure exercise of democracy, an unfiltered expression of voters’ preferences. Lawmakers are usually loath to counter what constituents have directly said they wanted.

The measure was signed by seven members of the District Council, including Chairman Phil Mendelson. The co-sponsors told local media that constituents had come forward after the June 19 vote to express their opposition to the change.

The situation parallels what happened in Maine, which killed its tip credit in a 2016 referendum. Servers there joined with restaurants to push successfully for a repeal by the state legislature in 2017. The waiters and waitresses argued that their income would likely go down, not up, as a result of the tip credit being scuttled. They feared that customers would stop tipping as a result of the change.

The group recently joined with servers in other locations to form Save Our Tips, which pushed hard to keep the tip credit in Washington, D.C. Save Our Tips and restaurant industry groups were opposed by a union-affiliated force called One Fair Wage, which argues that servers deserve the same full wage that co-workers are paid, and that tips should be regarded as a gift from patrons, not compensation for the work they’ve done.

Seven states do not allow restaurateurs to count tips toward servers’ pay. New York and a number of municipalities are considering disallowing the credit.

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